More costly than 'the war to end all wars'

Despite the relatively small number of American armed forces in Iraq and Afghanistan (140,000), the war effort is rapidly shaping up to be the third-most expensive war in United States history.

This conflict has already cost each American at least $850 in military and reconstruction costs since October 2001.

If the war lasts another five years, it will cost nearly $1.4 trillion, calculates Linda Bilmes, who teaches budgeting at the Kennedy School of Government at Harvard University. That's nearly $4,745 per capita. Her estimate is thorough. She includes not only the military cost but also such things as veterans' benefits and additional interest on the federal debt.

But even in stripped-down terms, looking only at military costs and using current dollars, the war's cost for the US already exceeds that of World War I.

That's in money, not in blood and tears. Fatalities from the combined Afghanistan-Iraq conflict now exceed 2,000. American participation in 1917-18 in World War I, a war infamous for its trench-warfare slaughter, resulted in 53,513 US deaths.

In constant inflation-adjusted dollars, the current conflict is the fourth most costly US war, behind World War II, Vietnam, and Korea. (See chart below.)

By the end of September, its projected military cost will be $252 billion. The amount spent on the war in Iraq ($186 billion) and Afghanistan ($66 billion) is "inching up" on the cost of the Korean War, says Steven Kosiak, an analyst at the Center for Strategic and Budgetary Assessment in Washington. CSBA provided the estimate based on government data.

The chart below, researched by Yale University economist William Nordhaus just before President Bush launched the Iraq war (and now updated for inflation), estimates Korea's military cost at $361 billion.

Given the Iraq-Afghanistan war is costing from $80 billion to $100 billion a year, its price is likely to exceed that of the Korean War by late 2006 or 2007 - if it lasts that long.

Last week, President Bush told the Veterans of Foreign Wars that the US will "finish the task" in Afghanistan and Iraq to honor those already fallen. Some analysts say Bush's statement implies that he anticipates the war lasting a long time.

Before the war is over, military costs may reach $500 billion, reckons Gordon Adams, an expert at George Washington University in Washington. He wonders if President Bush will make an "electoral calculation" next spring by pulling 30,000 or so troops out of Iraq before the midterm congressional elections. That would lower costs.

In terms of expenditures per soldier, the Iraq and Afghanistan wars are the most costly ever for the US, experts say. That's because of expensive technology and equipment, the Pentagon's heavy reliance on well-paid private contractors for some security operations, the higher pay and other inducements for an all-volunteer force, rising fuel costs, and difficulties in supplying troops in the Middle East.

Military costs run at least $6 billion per month, Mr. Adams calculates. Military estimates, he says, are based on oil costing $36 per-barrel, not the current $67. Fuel is a major bill in military operations, and the US must import much of the fuel it uses in Iraq.

Military costs are only one aspect. Spending for reconstruction and security, so far, add up to $24 billion for Iraq and $7 billion in Afghanistan, Kosiak figures. He puts the combined ongoing military and reconstruction costs at $7 billion to $8 billion per month.

In her estimate, Ms. Bilmes figures on $460 billion in military costs for the next five years, plus $315 billion in veterans' costs, $220 billion in added interest, and $119 billion for the economic impact of a $5 increase per barrel in the price of oil through July 2010. "I tried to be conservative," she says. (Her oil-cost estimate is based on the 15 percent reduction in Iraqi oil output since before the Iraq invasion and the increased instability in the Middle East.)

From one standpoint, the US economy should find it easier to absorb the present war. Today's defense budget is about 4 percent of gross domestic product, the nation's output of goods and services. That compares with 6.2 percent in the 1980s, 9.4 percent in 1960 (Vietnam), 14.2 percent in 1953 (Korea), and 38 percent in 1944 (World War II).

In that respect, today's war "is much cheaper," says Kosiak.